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Silver option from B&W International

Bristol & West International is offering the Silver Anniversary Bond, a guaranteed equity bond linked to the performance of four indices – the FTSE 100, S&P 500, Nikkei 225 and DJ Eurostoxx 50 index.

The bond was designed as part of the company’s 25th anniversary celebrations. It has a five-year term and investors will receive a full capital return regardless of the performance of the indices.

The bond has an early maturity feature, which means that if the four indices have grown by an average of at least 20 per cent after two years and six months, the bond will mature paying out 25 per cent of the original investment. To calculate the returns, the closing level of each index is recorded on October 13, 2006 and an average is produced, which will be compared with another reading taken on April 13, 2009.

If this early maturity feature is not triggered by the performance of the indices, it will run full term. In this case, investors will receive 100 per cent of the average growth in the indices. This is based on a comparison of index readings taken on October 13, 2006 with an average produced over the final 12 months of the term.

This product offers a degree of geographical diversity without compromising on the capital protection, so some investors may find this attractive. However, the presence of more than one index can complicate structured products and could lead to a situation where the lesser performing indices act as a drag on the performance of the other indices.

For the early maturity feature to be triggered in this product, all four indices must grow by at least 20 per cent after two and a half years. While this is not impossible, it does make less likely to mature early than a product that relies on only one index hitting a performance target to trigger early maturity.

According to the product database on the Structured Retail Products adviser website, this product is unique. There are similar products from the likes of Britannia International and Lloyds TSB Offshore that are linked to more than one index, but these products are linked to a different basket of indices.


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